How do you draw graphs to obtain the Total Surplus? I am confused as to where the values came from.

1. Consider two markets, the La La Land (L) and the Gotham City (G), with the following market demand and supply schedules: Market Demand Supply La La Land Q1 = 120 PL QL = P, Gotham City QG = 110 - 0.5PG QG = 0.5PG (a) Suppose the two markets can trade if an opportunity presents itself. Ob- tain the equilibrium prices, quantities, and total surplus in each of the two markets, if there were a transfer cost of 20. Recall that in absence of a transfer cost: QES = P-(120 P) = 2P - 120 P=60+0.5Q QED = 110 0.5P - (0.5P) = 110-P P=110 - Q That is, when a transfer cost (T) is zero, the import price (Pl) is equal to the export price (PE). With non-zero transfer costs, pl = PE+T; in our case, pl = p + 20. We can rewrite the excess supply and excess demand functions with respective prices, and then substitute in either the export price or the import price in terms of the other price and the transfer cost): p = 60+ 0.5Q pl= (PE+20) = 110 - Q Re-arrange the terms, equate two prices to each other, and solve for Q to obtain: Q = 20; pE = 70; pl = 90. Total surplus in the exporting market (La La Land): T5 = [70 x 70 + (120 70) 50] = 3700 Total surplus in the importing market (Gotham City): TS' = 90 x 45+ (220 - 90) * 65] = 6250 1. Consider two markets, the La La Land (L) and the Gotham City (G), with the following market demand and supply schedules: Market Demand Supply La La Land Q1 = 120 PL QL = P, Gotham City QG = 110 - 0.5PG QG = 0.5PG (a) Suppose the two markets can trade if an opportunity presents itself. Ob- tain the equilibrium prices, quantities, and total surplus in each of the two markets, if there were a transfer cost of 20. Recall that in absence of a transfer cost: QES = P-(120 P) = 2P - 120 P=60+0.5Q QED = 110 0.5P - (0.5P) = 110-P P=110 - Q That is, when a transfer cost (T) is zero, the import price (Pl) is equal to the export price (PE). With non-zero transfer costs, pl = PE+T; in our case, pl = p + 20. We can rewrite the excess supply and excess demand functions with respective prices, and then substitute in either the export price or the import price in terms of the other price and the transfer cost): p = 60+ 0.5Q pl= (PE+20) = 110 - Q Re-arrange the terms, equate two prices to each other, and solve for Q to obtain: Q = 20; pE = 70; pl = 90. Total surplus in the exporting market (La La Land): T5 = [70 x 70 + (120 70) 50] = 3700 Total surplus in the importing market (Gotham City): TS' = 90 x 45+ (220 - 90) * 65] = 6250